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Saturday 22nd of May 2010
November 5, 2009    

Euro zone interest rates on hold at 1%

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by Kay Murchie
Euro zone interest rates on hold at 1%

The European Central Bank (ECB) today elected to keep interest rates on hold at the historic low of 1% for the sixth consecutive month.

The news came shortly after the Bank of England announced it was keeping interest rates at 0.5%.

Furthermore, the US central bank, the Federal Reserve, opted to keep interest rates at the record low of close to zero and hinted that they would stay this way for the short-term at least.

Meanwhile Australia, which is one of the few developed economies not to have fallen into recession like its counterparts throughout the world, increased interest rates from 3.25% to 3.5%.

Returning to the euro zone, ECB president Jean-Claude Trichet, predicted the euro zone economy would recover gradually in 2010. “The latest information continues to signal an improvement in economic activity in the second half of this year,” said Mr Trichet.

Next week, official figures will reveal economic growth figures for the third quarter and expectations are for growth of around 0.5% from the second quarter.

In other news, figures showed that retail sales fell by 0.7% in September in the region as rising unemployment continues to have an impact on consumer spending.

Earlier this week, Eurostat revealed that the number of people unemployed across the euro zone grew to 15.3 million in September.

The latest figures mean that the unemployment rate across the 16 countries that use the euro is 9.7% - the highest rate since January 1999.

In other news, Iceland’s central bank reduced interest rates from 12% to 11%. Iceland has aggressively cut rates since March when they stood at a record high of 18%.

The economy is beginning to repair itself after it was badly hit by the financial crisis, which saw its three largest banks nationalised.

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